# Oracle EBS EOQ and Order Modifier Calculator

> Source: https://netray.co/tools/oracle-ebs-eoq-and-order-modifier-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Compute economic order quantity, then apply minimum order quantity and fixed lot multiplier to see the order size MRP would plan and its cost impact.

## Category

oracle

## Erp

Oracle E-Business Suite

## Industry

Discrete Manufacturing

## Audience

- EBS planner
- Buyer
- EBS functional consultant

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Annual demand

**Key:** annual_demand

**Type:** number

**Default:** 12000

**Min:** 0

**Step:** 100

**Unit:** units

#### Cost per order (setup or PO)

**Key:** order_cost

**Type:** slider

**Default:** 85

**Min:** 10

**Max:** 300

**Step:** 5

**Unit:** $

#### Unit cost

**Key:** unit_cost

**Type:** number

**Default:** 14

**Min:** 0

**Step:** 0.1

**Unit:** $

#### Annual carrying cost rate

**Key:** carry_rate

**Type:** number

**Default:** 22

**Min:** 1

**Max:** 60

**Step:** 1

**Unit:** %

#### Minimum order quantity

**Key:** min_order

**Type:** number

**Default:** 500

**Min:** 0

**Step:** 50

**Unit:** units

#### Fixed lot multiplier

**Key:** lot_mult

**Type:** number

**Default:** 250

**Min:** 1

**Step:** 1

**Unit:** units

**Outputs:**

#### Economic order quantity

**Key:** eoq

**Expr:** sqrt(2 * annual_demand * order_cost / (carry_rate / 100 * unit_cost))

**Format:** integer

**Primary:** true

**Description:** Square root of 2DS over H, with H as carrying cost per unit per year.

#### After minimum order quantity

**Key:** after_min

**Expr:** max(eoq, min_order)

**Format:** integer

#### After fixed lot multiplier

**Key:** order_qty

**Expr:** ceil(after_min / lot_mult) * lot_mult

**Format:** integer

**Primary:** true

**Description:** Rounded up to a multiple of the lot multiplier.

#### Orders per year

**Key:** orders_year

**Expr:** annual_demand / order_qty

**Format:** decimal

#### Annual cost at EOQ

**Key:** cost_eoq

**Expr:** annual_demand / eoq * order_cost + eoq / 2 * carry_rate / 100 * unit_cost

**Format:** currency

#### Annual cost at planned quantity

**Key:** cost_adj

**Expr:** annual_demand / order_qty * order_cost + order_qty / 2 * carry_rate / 100 * unit_cost

**Format:** currency

**Description:** Ordering plus carrying cost at the adjusted quantity.

#### Cost of the modifiers

**Key:** penalty

**Expr:** cost_adj - cost_eoq

**Format:** currency

**Chart:**

#### EOQ and planned quantity vs cost per order

**Type:** line

**X:** order_cost

**From:** 10

**To:** 300

**Steps:** 30

**Series:**

- eoq
- order_qty

**Disclaimer:** Classic EOQ assumes constant demand, a fixed order cost and no quantity discounts. Real MRP lot sizing also reacts to dependent demand timing and supplier price breaks.

## Content

**Intro:** Economic order quantity gives a theoretical best lot size, but Oracle planning then applies order modifiers such as minimum order quantity and fixed lot multiplier. This calculator shows what lot size results and what the modifiers cost you in total annual cost.

**Sections:**

#### How to use it

**Body:** Enter annual demand, the cost to place or set up an order, the unit cost and your carrying cost rate as a percentage per year. Add the minimum order quantity and fixed lot multiplier set in the item attributes. The tool returns the EOQ, the quantity after the minimum, the final quantity rounded up to a multiple, the number of orders a year and the cost impact of the modifiers. Slide the cost per order to see how setup reduction changes the ideal lot size.

**Bullets:**

- Carrying rate usually covers capital, storage, insurance and obsolescence
- Use true setup cost including lost capacity for make items
- Compare the cost penalty to the supplier's price break value

#### The method

**Body:** EOQ equals the square root of two times annual demand times order cost divided by annual carrying cost per unit, where carrying cost per unit is the carrying rate times unit cost. The annual cost is orders per year times order cost plus average inventory times carrying cost, where average inventory is half the lot size. In Oracle the Minimum Order Quantity sets the smallest planned order, and the Fixed Lot Multiplier makes order quantities multiples of a value, such as a pack or pallet, so the planner never proposes a part pack.

#### Worked example

**Body:** Demand of 12,000 a year, 85 per order, 14 per unit and 22 percent carrying gives carrying cost of 3.08 per unit per year and an EOQ of about 812 units. The minimum of 500 does not bind. The lot multiplier of 250 rounds it up to 1,000, which means 12 orders a year. Annual cost rises by a small amount compared with the pure EOQ. The curve is flat near the optimum, so rounding to a pack size usually costs little, and the calculator confirms this with a number.

#### Common mistakes

**Body:** Entering carrying cost as a fraction instead of a percent, ignoring the setup cost of a work center, and using EOQ for items with strongly dependent lumpy demand are the usual errors. EOQ also ignores price breaks, so a supplier discount at a higher quantity can beat the EOQ result. Use the tool for steady items and use MRP lot for lot with a multiple for items driven by the master schedule.

**Cta:** Netray can compare the order modifiers on your EBS items with the economics of actual order and setup cost, and list the ones that cost you money.

**Faq:**

#### What is the fixed lot multiplier in Oracle?

**Answer:** It is an item attribute that forces planned order quantities to be a multiple of a value. If the planned requirement is 620 and the multiplier is 250, MRP plans 750. It is typically set to a pack, pallet or tool capacity.

#### What does minimum order quantity do?

**Answer:** It sets the smallest quantity MRP will plan for an order. If net requirements are below it, MRP plans the minimum, and the excess carries into inventory until used.

#### How flat is the EOQ cost curve?

**Answer:** Very flat near the optimum. A lot 20 to 30 percent away from EOQ raises total cost only a few percent, which is why rounding to pack sizes usually does little harm.

#### Should I use EOQ for make items?

**Answer:** Yes if you can state the true setup cost, including lost capacity. For items with dependent demand from a master schedule, lot for lot or period order quantity usually fits better.

## Search terms

oracle ebs eoq, fixed lot multiplier oracle, minimum order quantity oracle mrp, economic order quantity calculator, oracle order modifiers planning, eoq with minimum order quantity, lot sizing oracle ebs

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